SPACs offer hope for reviving Singapore’s flagging IPO market

SINGAPORE — Singapore’s stock change this month launched new guidelines permitting SPACs to listing, a transfer it hopes will draw extra companies to boost funds within the city-state amid an IPO market that has been stagnant for years.

As of Friday, particular objective acquisition corporations can list on the Singapore Exchange’s (SGX) mainboard.

SPACs, which have soared in reputation just lately, don’t have any business operations and are established solely to boost capital from buyers for the aim of buying a number of working companies. They elevate capital in an preliminary public providing and use the money to merge with a non-public company and take it public.

Singapore’s benchmark index has historically been dominated by finance and property names. But the change has set its sights on drawing tech corporations, and it thinks that SPACs might be a great way to take action.

Mohamed Nasser Ismail, SGX’s head of fairness capital markets, instructed CNBC on Monday that SPACs present another route for corporations to entry public markets.

“There is now a growing pool of new technology or new economy companies that are rising across the region that will find the SPACs route … in Singapore to be an attractive, valuable and sustainable way of securing funding going forward,” Nasser instructed CNBC’s “Squawk Box Asia.”

Companies that pursue a SPAC itemizing on the SGX should meet a minimal market capitalization of 150 million Singapore {dollars} ($111 million).

Singapore’s stagnant IPO market

SPACs have exploded in reputation, particularly within the U.S. There have been 358 SPAC IPOs up to now this year within the U.S., rocketing over 800% from the year earlier than. That accounts for the overwhelming majority of the 379 SPAC IPOs globally up to now this year, in line with knowledge from consultancy EY. The remainder of the SPAC IPOs had been in Europe.

Over in Asia, Singapore could be the primary bourse to offer the SPAC route, in line with Reuters.

That might present a much-needed injection of recent enthusiasm for Singapore’s IPO market, which has not drawn a lot curiosity from corporations – even its personal — regardless of the bourse’s efforts to make itemizing within the city-state enticing.

Singapore-headquartered ride-hailing big Grab, for instance, plans to listing on the Nasdaq when its SPAC merger with Altimeter Growth Corp. is accomplished.

In the primary half of this year, Singapore drew simply three listings — a 50% drop from a year in the past, in accordance EY knowledge. In comparability, Hong Kong, thought of a rival to Singapore’s monetary hub standing, attracted 46 listings in the identical interval.

The quantity of money raised was additionally far much less. Singapore’s three IPOs had a complete of $200 million in proceeds, whereas Hong Kong’s 46 listings raised $27.4 billion.

For corporations, SGX’s Nasser says {that a} SPAC “brings certain advantages that a traditional IPO route may not have.”

“SPACs can provide better certainty in terms of timing, valuation and execution,” he mentioned.

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